● Once established, upon approval of a majority of the total voting interests, the association may terminate a reserve account and that account will be removed from the budget. ● After one or more reserve accounts are established, annually, the members, by a majority of the membership of the association (at a meeting with a quorum), may vote to waive or reduce the funding of the reserves. HOA disclosure statements If the budget of the homeowners’ association does not provide reserve accounts and the association is responsible for the repair and maintenance of capital improvements that may result in a special assessment if reserves are not provided or not fully funded, each financial report for the previous fiscal year must contain a disclosure statement in conspicuous type: THE BUDGET OF THE ASSOCIATION DOES NOT PROVIDE FOR FULLY FUNDED RESERVE ACCOUNTS FOR CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE THAT MAY RESULT IN SPECIAL ASSESSMENTS REGARDING THOSE ITEMS. OWNERS MAY ELECT TO PROVIDE FOR FULLY FUNDED RESERVE ACCOUNTS UNDER F.S. 720.303(6), UPON OBTAINING THE APPROVAL OF A MAJORITY OF THE TOTAL VOTING INTERESTS OF THE ASSOCIATION BY VOTE OF THE MEMBERS AT A MEETING OR BY WRITTEN CONSENT. If the budget of the association does provide for funding accounts for deferred expenditures, including, but not limited to, funds for capital expenditures and deferred maintenance, but such accounts are not created or established as a reserve account, each financial report for the previous fiscal year must also contain a disclosure statement in conspicuous type: THE BUDGET OF THE ASSOCIATION PROVIDES FOR LIMITED VOLUNTARY DEFERRED EXPENDITURE ACCOUNTS, INCLUDING CAPITAL EXPENDITURES AND DEFERRED MAINTENANCE, SUBJECT TO LIMITS ON FUNDING CONTAINED IN OUR GOVERNING DOCUMENTS. BECAUSE THE OWNERS HAVE NOT ELECTED TO PROVIDE FOR RESERVE ACCOUNTS UNDER SECTION 720.303(6), FLORIDA STATUTES, THESE FUNDS ARE NOT SUBJECT TO THE RESTRICTIONS ON USE OF SUCH FUNDS SET FORTH IN THAT STATUTE, NOR ARE RESERVES CALCULATED IN ACCORDANCE WITH THAT STATUTE. The amount to be reserved in any account established shall be computed by means of a formula that is based on estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. The association may adjust replacement reserve assessments annually to consider any changes in estimates of cost or useful life of a reserve item. Funding formulas for reserves must be based on an analysis of each of the required assets or a pooled analysis of two or more of the required assets. The formula may be adjusted each year for changes in estimates and deferred maintenance performed during the year and may include factors such as inflation and earnings on invested funds. The reserve funding formula may not include any type of balloon payments.
that the association provided or made it available to each unit owner in accordance with this section. The statement must be provided to the Division (DFCTMH) in the manner established by the Division using a form posted on the division’s website. NOTE: Significant additions and changes related to reserves, milestone inspections, and the structural integrity reserve study (SIRS) were made effective July 1, 2025, chapter 2025-175. Provisions were also added as they relate to the reserves of a condominium considering termination. These changes will be addressed in the Legal Update portion of this CAM CE Course. Reserves homeowners’ associations (HOA) As with reserves in condominium and cooperative associations, reserves for homeowners’ associations may be necessary in order to set aside money to help keep the association in a good financial state by providing savings to handle future expenses. The purpose of reserves for a homeowners’ association include: ● Avoids special assessments or loans ● Preserves appearance of a community ● Keeps community safe and viable ● Provides planning and financial guidance of projects ● Protects investment ● Reduces cost of maintenance ● Fulfils a board’s fiduciary duty ● Complies with governing documents and statutes Common reserve components in a homeowners’ association my include: ● Roads, curbs, and sidewalks ● Signs and marques ● Streetlights ● Shorelines, seawalls, lakes ● Entry gate systems ● Irrigation systems ● Storm drains ● Weir mechanics ● Perimeter structures like walls and fences ● Recreation facilities including tennis courts, pools, buildings, and roofs Statutory reserves requirements for HOA reserves F.S. 720.303(6) provides that the budget may include reserve accounts for capital expenditures and deferred maintenance that the association is responsible for. A homeowners’ association is considered to have provided for reserve accounts if the declaration of covenants, articles, or bylaws obligate the developer to create reserves or upon the affirmative approval of a majority vote of the total voting interests of the association as follows: ● The approval may be obtained by vote of the members at a duly called meeting of the membership or by the written consent of a majority of the total voting interests of the association. ● The approval action of the membership must state that reserve accounts will be provided for in the budget and must designate the components for which the reserve accounts are to be established. ● Once approved by membership, the board of directors must include the required reserve accounts in the budget in the next fiscal year following the approval and each subsequent year. ● Once established, the reserve accounts must be funded, maintained, or have their funding waived in the manner provided in the governing documents or statutes.
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Book Code: CAMFL1526
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